6/09/2009 @ 6:50PM

Ex-BDO Seidman CEO Indicted In Tax Case

The ex-chief executive of accounting firm BDO Seidman and six others were indicted Tuesday on federal charges they peddled questionable tax shelters that generated more than $7 billion in phony losses for hundreds of wealthy clients who used the losses to offset real income and cut their tax bills.

In a 79-page indictment filed in New York, U.S. authorities said that Denis Field, 58, of Naples, Fla., who headed BDO Seidman from 1999 to 2003, was part of a group that defrauded the Internal Revenue Service by designing, marketing, implementing and then defending bogus tax shelters from 1994 to 2004.

Charged with Field was Robert Greisman, 48, of Deerfield, Ill., a former tax partner in BDO Seidman’s Chicago office and a member of its national “tax solutions group.”

Three lawyer/accountants who worked in Chicago for the now-defunct Dallas-based law firm of Jenkens & Gilchrist were also indicted. They are Paul M. Daugerdas, 58, of Wilmette, Ill.; Erwin Mayer, 45, of Winnetka, Ill., and Donna Guerin, 48, of Elmhurst, Ill. Forbes first reported in 2002 involvement of Daugerdas and his firm in tax shelter promotion.

Rounding out the group of accused were two former investment officers of
Deutsche Bank
: Raymond Craig Brubaker, 53, of Dallas, and David Parse, 47, of Elmhurst, Ill.

Collectively, the indictment says, the seven were paid $180 million in fees for their services from 1998 to 2002, and that all but Guerin used shelters themselves to evade their own tax on the income they earned from the shelters. The charges include conspiracy, tax evasion and tax-law obstruction.

No clients were accused. However, many were described in the indictment by their initials, and some clients have been earlier identified in other court documents. Some of the defendants have been named in civil cases filed by clients after the IRS disallowed the claimed losses and they had to pay huge bills for back taxes, interest and sometimes penalties. Other clients have been engaged in court battles with the IRS over what they owe.

The indictment represents the latest move by the federal government in its campaign against tax dodges and dodgers.

A particular focus has been BDO Seidman, which has been spending heavily recently on a TV campaign touting its experience and ability to handle hard tasks. Last week, former BDO Seidman Vice Chairman Charles W. Bee Jr. pleaded guilty to conspiracy, tax evasion and perjury charges. Earlier this year, another ex-vice chairman, Adrian Dicker, and principal Michael Kerekes admitted tax evasion and conspiracy.

In a statement, BDO said it had cooperated “fully” with the investigation “and will continue to do so.” The statement said that the group of partners within the firm that marketed tax shelter products was dissolved “several years ago.”

Asked how the charges in the new indictment squared with BDO Seidman’s ongoing television advertising campaign, a spokesman said the allegations concerned events that happened “many years ago.”

The indictment accuses the defendants of providing a soup-to-nuts operation: fashioning shelters with no economic purpose other than tax reduction, accompanied by vast documentation making false claims and hiding the bogus nature of the transactions.

The tax shelters at question in this case went by various names, including Homer, SOS and Swaps. Generally, they used a combination of newly formed corporations and partnerships, option positions, trusts or borrowed money to create huge paper losses out of proportion to the amount of money the clients actually had at risk.

In the usual chest-thumping that accompanies such indictments, Lev L. Dassin, the acting U.S. attorney in New York, said in a statement, “We are dedicated to holding accountable tax and financial professionals whose deceit and fraud cost this country millions in tax revenues.”

Added IRS Commissioner Doug Shulman: “In today’s economic environment, it’s more important than ever that the American people feel confident that everyone is playing by the rules and paying the taxes they owe.”